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EU: At 0700GMT, Germany's January PPI and January final HICP numbers are due to be
released. At 0745GMT, French January HICP and February manufacturing and
services sentiment data will be released.
Further euro area numbers will be released at 0900GMT, with the release of the
Italian December industrial orders.
At 1045GMT, German Chancellor Angela Merkel is scheduled to speak in Berlin. At
1130GMT, Bundesbank Board member Andreas Dombret also give a speech in Berlin.
Another speech in Berlin is expected at 1250GMT, when German Economics Minister
Philipp Roesler is slated to speak, followed at 1330GMT, by comments from Alan
Krueger, chair of the White House Council of Economic Advisers.
At 1500GMT, the EMU February flash consumer climate numbers will
be released, followed at 1530GMT by European Monetary Affairs Commissioner Olli
Rehn and Ifo Pres Hans-Werner Sinn taking part at a jubilee event in Berlin.
Later, at 1645GMT, German Chancellor Angela Merkel and Norwegian Prime Minister
Jens Stoltenberg will hold a joint press conference.
GERMAN PRESS: The German Conservative Party (CDU) is continually topping the
polls for the the German parliamentary elections this autumn, reports Stern. For
the second consecutive month, the party has attained 43% of all votes. The
Social Democrats (SPD) rank at 24% and apparently, there is little hope for the
Pirate Party, since they would not make the 5% hurdle to attain seats in the
Bundestag, the magazine comments. Third in line are the Greens with 15% of the
votes.
ITALY: Italian centre-lefty deputy leader has offered Mario Monti a moratorium
on the contentious issue of labour market reform, the FT says, in order to try
and forge a governing coalition after the weekend elections.
UK: There is a raft of releases from the UK expected at 0930GMT, with the release of
the February BOE MPC Minutes, January CML Mortgage Lending and the February
Labour Market Statistics.
Although a repeat of last month's voting pattern is likely, the minutes will
show whether the decision to reinvest the proceeds of the stg6.6 billion in
gilts maturing this March, which were bought under the BOE's quantitative easing
program, was unanimous. To have done anything else would of course have amounted
to a monetary tightening. It is unlikely that any of the MPC would have objected
to this move, given the continuing weakness of growth.
UK PRESS: The winnimg bidders for the UK's 4G networks will be announced later
Weds, with analysts forecast a windfall for the government in the region of stg
4 bln, the Telegraph says.
US: U.S. data is expected from 1330GMT, with the release of the January Housing
Starts, Building Permits and January PPI.
The Producer Price Index is expected to rise 0.3% in January after a revised
0.3% decline, while core PPI is forecast to rise 0.2%. The data will include
annual revisions released on February 15.
The pace of housing starts is expected to decelerate to a 925,000 annual rate in
January after jumping 12.1% in December. Home building has been on an upward
trend for the last year, based both on the government's data and the NAHB home
builders index, which paused at 47 in January after rising for several months in
a row.
The Redbook Average for the Feb 16 week will be released at 1355GMT.
At 1800GMT, the FOMC Meeting Minutes from January 30 will cross the wires.
EURO-DOLLAR: Closed in NY Tuesday at $1.3388, just off recovery highs at $1.3396
with the earlier release of a stronger than forecast Germany ZEW cited for
providing the buoyancy. Rate had settled between $1.3385/95 through the main
part of the NY afternoon into the close. Rate picked up fresh demand interest
into the transition from NY into Asia, a UK clearer and a French name noted
buyers that soaked up supply in the $1.3400/10 area. Rate progressed on to
$1.3434, after stops above $1.3425 were triggered, but momentum then faded. Rate
eased off, finding support ahead of $1.3400 ($1.3406 pullback low) before edging
back above $1.3410 into Europe. German PPI and CPI data due up at 0700GMT to
provide the early interest, US PPI at 1330GMT into the afternoon, with Eurozone
consumer confidence at 1500GMT gaining some interest. ECB Noyer in a WSJ
interview was seen countering calls for a cut in the refi rate, preferring to
narrow spreads. ECB Asmussen suggested market could be cautiously optimistic on
Q1 growth following a weak Q4. Both comments seen aiding current euro buoyancy.
Bids $1.3385/80. Resistance remains into $1.3435, more at $1.3450/60.
Fed FOMC
Minutes due for release at 1900GMT.
EURO-DOLLAR: Retains a buoyant tone into early Europe, though so far holding off
a retest of overnight highs at $1.3434. Tech traders note $1.3438 close behind
corresponding to a 61.8% retrace of the pullback from $1.3520 to $1.3306, with
offers seen into $1.3440. A break here to open a move toward $1.3450/60. Support
now seen placed into $1.3400, more between $1.3385/80.
CABLE: Closed in NY Tuesday at $1.5426 after rate had been pressed to extended
7-mth lows of $1.5415, with euro-sterling, seen as the main driving force on
general demand for the euro, driving back up from lows at stg0.8601 to
stg0.8685. The cross closed in NY at stg0.8678. Cable marked overnight lows at
$1.5420 before clawing its way up to $1.5452 as rate trailed euro-dollar's
extended rally, with euro-sterling able to touch stg0.8700 before backing off.
The cross eased off to stg0.8680 before edging back above stg0.8690 into Europe.
Cable eased off its highs before settling around $1.5440 ahead of Europe.
Traders noted sovereign demand into Tuesday's pullback, eventually providing
cushioning ahead of the next option barrier level at $1.5400. BOE Minutes at
0930GMT, along with UK employment data, provides the domestic interest this
morning. Following last week's Inflation Report most expect no surprises from
today's Minutes release, voting for unchanged rates to be 9-0, with Miles the
only one to vote for increased QE. Traders noted that S&P made no announcement
on the UK rating, as had been rumoured for after Tuesday's close, and was seen
providing some added buoyancy.
YEN: Dollar-yen closed NY at Y93.57 after recovering off a session low of
Y93.29, aided by higher US yields. This recovery extended into early Asia, the
move up gaining a boost on Gotobi Day linked demand for the Tokyo fix, along
with traders reacting to a BOJ Governor short list, published in the Daily
Yomiuri, that had failed to mention Muto (seen as less aggressive on bold
monetary easing) as well as the release of weaker than expected Japan trade
data. Dollar-yen traded on to Y93.83 but met stiff resistance which prevented
further gains. Euro-yen closed NY at Y125.25, moving up in tandem with
dollar-yen to Y125.90. As momentum faded yen pared these early losses,
dollar-yen drifting back to Y93.14 before correcting to Y93.30 , while euro-yen
eased off to Y124.90 before edging back to its NY close, into Europe. Ichimoku
analysts still favour further upside progress in both pairs, but have noted that
the Tenkan line in the past two sessions has flattened and would suggest a
weakening in the recent upside momentum. Dollar-yen may still have room for a
retest on Y94.40, ahead of Y95.70. Euro-yen similar for Y127.70 ahead of
Y128.70.
DOLLAR-YEN: Japanese names report this morning of unofficial figures
heading into the Japanese fiscal year end in March. They forecast
exporters to set their dollar-yen targets for 2013 at 83-88. One trader
notes of their surprise the estimates were so low, adding that exporters
are keeping a conservative outlook on potential profits even though
repatriation is expected. Dollar-yen last Y93.34.
JAPAN STOCKS CLOSE: Japan's benchmark stocks are higher Wednesday. The Nikkei
225 was higher by 95.94 points, or 0.84%, at 11468.28. Into the close, the
broader-based TOPIX was higher by 10.02 points at 973.63. Market breadth
indicators saw 149 issue higher, 63 lower and 13 unchanged. Preliminary volume
stood at 1.8 bn shares.
OPTIONS: FX: Option expiries for today's 1000ET cut,
* Euro-dollar; $1.3310, $1.3350, $1.3475, $1.3500
* Dollar-yen; Y92.00, Y92.50,
Y94.50(large)
* Euro-yen; Y125.00
* Cable; $1.5500
* Aussie; $1.0350, $1.0400
EUROZONE ISSUANCE: Sovereign bond issuance in the eurozone this week is now
estimated to come in at E24.43bln after Belgium priced E5.0bln syndicated new
5-year benchmark bond Tuesday. This compares to E15.32bln worth of bonds sold
last week. Slovakia kicked off supply on Monday with tap of the floater Nov 2016
SLOVGB218 and 4.625% Jan 2017 SLOVGB219 bonds for E255.2mln and E175mln,
respectively. Looking ahead, Germany re-opens its benchmark 10-year 1.50% Feb
2023 Bund on Wednesday for up to E5.0bln. On Thursday, France plans to sell
2.00% July 2015 BTAN, 4.25% Oct 2017 OAT, 1.00% May 2018 OAT on Feb 20 for
between E7.0bln-E8.0bln. In addition, France plans to sell a new 0.25% July 2025
OATei on Thursday for between E1.5bln-E2.5bln. The main focus is on Spain's bond
auctions on Thursday, where the Tesoro Publico taps the 2.75% Mar 2015 Bono,
4.30% Oct 2019 Obligaciones and also 5.40% Jan 2023 Obligaciones issues for
between E3.0bln-E4.0bln indicative size. In terms of reinvestment flows,
moderate redemption of Greek floater for E0.44bln and coupons from Austria
E0.3bln and Ireland E0.2bln -- leaves net cash flow negative by around E23.5bln.
Please see Eurozone bond auction calendar & MNI Eurozone Net Cash Flow Matrix.
EUROZONE ISSUANCE: Below are possible syndicated deals from eurozone issuers in
the pipeline:
- Spain is mulling a 5-year dollar deal, 144A Reg S, in the near future after
holding road-show in US last week. Price talk is MS+300 area. Leads are
Barclays, Citi, Santander, SocGen.
- Slovakia has mandated Deutsche Bank, ING, SocGen, Slovenska Sporitelna (Erste
Group) as joint leads for its new euro benchmark bond, with is expected to be
launched in the near future, subject to market conditions, according to sources
close to the deal.
EUROZONE T-BILL ISSUANCE: Portugal come to the Eurozone sovereign T-bill market
Wednesday with plans to re-open a 3-month May 17 T-bill, and issue new 12-month
Feb 21, 2014 T-bill for indicative amount of E1.25-E1.5bln. To recap T-bill
issuance so far this week, on Monday Netherlands sold E2.09bln 3-month DTC at
average yield 0.007% and sold E1.11bln 6-month DTC at average yield 0.026%. In
the afternoon, France sold E3.595 3-month BTF at average yield 0.015%, E1.798bln
6-month BTF at average yield 0.050% and E1.795bln 12-month BTF at average yield
0.131%. On Tuesday Spain sold E886mln 3-month Letra at average yield 0.421% and
sold E3.115bln 9-month Letra at average yield 1.144%. ESM sold E1.948bln 6-month
Bill at average yield 0.0374%. Still to come, on Thursday Ireland plan to issue
E500mln of a new 3-month May 20, 2013 T-bill.
GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens its 10-year
benchmark 1.50% Feb 2023 Bund issue Wednesday for up to E5.0bln. This is the
first tap of this issue that was first launched on Jan 16 where the auction
marked the DFA's change to a new maturity structure from Jan, July, and Sept to
Feb, May, and Aug months following inclusion of collective action clauses
(CACs). The issue trades at 1.642% mid-yield and has richened in recent sessions
amid uncertainty in Italy elections. However, outright yield is around 8bps
higher since its launch. Historic results show demand has been solid, despite
record low coupon and issue isn't the CTD into Mar future. At the inaugural
auction on Jan 16, E4.007bln was alloted at avg yield of 1.56% and covered 1.7
times, with the Buba retaining 19.9% of the sale. Prior to this, the old 1.50%
2022 Bund was sold on Nov 21 and E3.253bln was alloted at avg yield 1.40% and
covered 1.5 times, with the Buba retaining 18.7%. The avg cover ratio for the
past 5 auctions is 1.4 times. This issue is due to be re-opened again on Mar 20
and sometime in Apr for E4.0bln each auction -- taking the total outstanding
size to E18.0bln.
Auction results due after bidding closes at 1030GMT.
PORTUGAL T-BILL AUCTION PREVIEW: Portugal's debt agency, Instituto de Gestao da
Credito Publico (IGCP) will re-open 3-month May 17, 2013 T-bill and issue new
12-month Feb 21, 2014 T-bill, for indicative amount of E1.25-E1.5bln Wednesday.
This will be the second t-bill auction of 2013, following a successful first
auction on Jan 16 where IGCP raised E2.5bln across 3-/12-/18-month T-bills.
Mid-yield on the 3-month T-bill is seen around 0.75% which is above the average
yield of 0.667% seen at the Jan 16 auction, where E300mln was sold with cover of
3.8 times. As for the new 12-month T-bill, there currently is no grey market,
but the mid-yield on the old 12-month Jan 17, 2014 T-bill is seen at
1.25%/1.30%, which is below the level at last month's auction. IGCP allotted
E1.2bln at average yield 1.609% and covered 2.3 times. With a T-bill redemption
of E2.67bln on Feb 22, net cash flow could be positive to the tune of E770mln
which is seen as underpinning demand.
Auction results are due to be announced
around 1045GMT.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- Feb 20 Greek floater 2013 redemption for E443mln
- Feb 20 Portuguese debt chief Rato speaks in Lisbon
- Feb 20 Portugal sells 3-/12-month T-bills for E1.25bln-E1.5bln
- Feb 21 European flash Feb PMI manufacturing/services survey
- Feb 21 Spain sells 2015-/2019-/2023 bonds for up to E4.0bln
- Feb 21 Ireland FinMin Noonan speaks in London at 1130GMT, Q&A to follow
- Feb 22 Germany Feb IFO business survey
- Feb 22 ECB announces payback total amount for 2nd LTRO
- Feb 22 Portugal T-bill redemption for E2.205bln
- Feb 22 European Commission publishes updated forecasts
- Feb 24 Cypriot Presidential elections (second round)
- Feb 25 Italy CTZ/linker auctions
- Feb 24/25 Italy general election
- Feb 26 Italy T-bill auction
- Feb 27 Italy BTP auctions
US: Timeline of key events in the US for the next few days:
- Feb 18-22 Congress out, return cuts-close to Mar 1 sequester deadline
- Feb 20 FHLB Global announcement
- Feb 20 Fed Outright Tsy Coupon Purch 05/15/2020-02/15/2023 $2.75 - $3.50bn
- Feb 20 UST auctions 4 week at 1130ET
- Feb 20 FOMC Meeting Minutes at 1400ET
- Feb 21 Fed Bullard (voter) at NYU Stern Business School at 1230ET
- Feb 21 Fed Outright Tsy Coupon Purch 11/30/2018-02/15/2020 $3.00 - $3.75bn
- Feb 21 UST announces 3/6m bills, 2-, 5-, 7-yr notes at 1100ET
- Feb 21 UST auctions $9B new 30-yr TIPS at 1300ET
- Feb 21 Fed Williams (non-voter) at NY Forecasters Club in NY at 1300ET
- Feb 21 Fed Fisher (non-voter) in Dallas, TX at 2115ET
- Feb 21 Money Supply (M2) at 1630ET
- Feb 22 Fed Outright Tsy Coupon Purch 02/15/2036-02/15/2043 $1.25 -$1.75bn
- Feb 22 Fed Gov Powell at U Chicago's MonPol Forum in NY w/ Q&A at 1015ET
- Feb 22 NY Fed Rosengren (voter) at U Chicago's MonPol Forum in NY at 1015ET